The EUR/USD currency pair showed an upward movement again on Friday, but, as we said earlier, so far all this growth looks just like a banal upward pullback. Even though the moving average line has been overcome, so far it is impossible to say that a new uptrend has begun. From time to time, the pair overcomes the moving, since even it cannot do without rollbacks at all, but all these rollbacks end very quickly with the resumption of the fall. Recall that the fundamental, geopolitical, and macroeconomic backgrounds have not changed much over the past week. Therefore, the euro currency still has virtually no support from the above factors. Still, all the euro can count on is the technical factor. Especially good is what we mean, it can be seen on the 24-hour TF: the price has been moving down recoilless for several months, and there should be corrections. Therefore, the hope of the euro now depends only on the bears. If they at least reduce their short positions, this can already lead to a good strengthening of the euro. But the long-term prospects for the EU currency are still very vague.

The greatest risk factor lies in the plane of the geopolitical conflict between Ukraine and Russia. Let's think about it because this conflict has no direct relation to the European Union. The EU could refuse to support Ukraine and simply strengthen its borders to prevent a possible attack, which is so feared in the alliance. However, the European Union and the United States, on the contrary, provide great assistance to Ukraine. There are certain geopolitical reasons for this, for example, the opportunity to weaken the Russian Federation as much as possible, which is a major player on the world stage and a competitor. Nevertheless, as soon as the conflict began, the euro rushed down, although there were no negative consequences for the EU at that time. Consequently, any escalation of the conflict and its spread to other countries may lead to an even greater fall in the euro currency (and the pound, too). And if so, then it is impossible to be sure of the further growth of the euro, because in the coming month new hotbeds of aggression may break out in Finland or the Baltic states, not to mention Transnistria.

Preview for the new week.

There are plenty of important topics for the euro and the dollar now. For example, the accession of Finland and Sweden to NATO, which Turkey is currently blocking, or the sixth package of EU sanctions against Russia, which Hungary is currently blocking. However, let's now analyze future macroeconomic events. There will be very few of them this week. Everything will start on Tuesday with the indices of business activity in the services and manufacturing sectors of the European Union. It is unlikely that in the current circumstances, these indices are capable of provoking a serious market reaction. ECB President Christine Lagarde will deliver a speech on Wednesday and this event may be really interesting, as the market continues to expect specific statements from Lagarde about when the rate will be raised for the first time, by how much, and how many increases there will be in 2022. So far, Lagarde is trying to answer such questions as extensively as possible, which indicates her uncertainty about the correctness of the decision to tighten monetary policy. Moreover, the growth rate of the European economy is now minimal and any tightening can drive it into recession. Nothing more interesting is planned in the European Union this week, although, of course, there will also be several speeches by representatives of the ECB, who can also talk about rates, inflation, and recession. Thus, it is unlikely that data will be received from the European Union this week that will be able to support demand for the euro. The only hope is for Christine Lagarde. The euro currency did not show the strongest growth last week, and the weaker it is this week, the fewer chances there will be for a long upward movement of the euro/dollar pair. Of course, there will also be American events and reports, we will consider them in detail in the article on the pound/dollar.

The average volatility of the euro/dollar currency pair over the last 5 trading days as of May 23 is 95 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.0467 and 1.0656. The reversal of the Heiken Ashi indicator back up will signal the resumption of the upward movement.

Nearest support levels:

S1 – 1.0498

S2 – 1.0376

S3 – 1.0254

Nearest resistance levels:

R1 – 1.0620

R2 – 1.0742

R3 – 1.0864

Trading recommendations:

The EUR/USD pair continues to be located above the moving average and is trying to maintain the formation of a new upward trend. Thus, now we should consider options for opening new long positions with targets of 1.0620 and 1.0656 in the event of a reversal of the Heiken Ashi indicator upwards. Short positions should be opened with a target of 1.0376 if the price is fixed below the moving average line.

Explanations of the illustrations:

Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which you should trade now.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.

CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.